section should rightfully be entitled, “The
Private Investigator’s Approach to Frauds & Scams,”
because much of what I have to say here does not apply to
law enforcement. In fact, the first and most important point
I want to make is, we aren’t
cops anymore. Private Investigators
fail to serve their Client’s best interests if they
approach their situation from a law enforcement officer’s
those of us who matriculated to the private sector following
a law enforcement career, it is important (and often difficult)
to remember that:
are not law enforcement officers, we are not public servants,
saving the world and serving society’s best interests
are not our responsibility anymore. Our job is to serve
the legitimate interests of our Clients.”
second point I want to make relates to the nature of the con
artists you will be dealing with, and the realistic approach
to pursuing your Client’s objectives. Swindlers and
grifters are opportunistic sociopaths who prey upon the trust
and gullibility of others, feeling nobody’s pain in
the process. On the other hand, these people live by their
wits, and it would be foolish to underestimate them. Morally
reprehensible and devoid of compassion as they may be, they
tend to be intelligent, practical and devious.
I believe that is a good thing. I dread and avoid cases involving
the weird, twisted, loony-tune characters of the world like
the plague. I’ll deal with Organized Crime, corruption,
scams, racketeering and murder - just spare me the obsessed
stalkers, and similar nutcases, who ought to be wearing tinfoil
hats. Those people are not rational, they can be unpredictably
dangerous, and it is impossible to anticipate what they will
artists, on the other hand, do what they do for the money,
they are businessmen, and they tend to behave rationally.
Some have little formal education, but they are all experts
in human behavior who have mastered the art of persuasion.
They use words as the instruments of deception, and they recognize
pleas and/or threats as the manifestations of desperation.
Trying to beg, bluff or intimidate a professional swindler
is a complete waste of time and energy.
artists invariably have a special, circular file for “Demand
Letters,” but they may settle a case if it becomes obvious
that settlement is their most painless, and cost effective,
option. The more professional,
methodical, diligent and relentless you are, the more likely
your target will be to pay your Client to make you go away.
The third point I want to make in laying the foundation for
the discussions that follow is closely related to the first
point, and critical with regard to point two.
Private Investigators, our investigative efforts may very
well culminate in case submissions, Cease and Desist Orders,
criminal prosecutions, the “winding up” of the
criminal enterprise, criminal convictions, jail time, civil
penalties, receiverships, etc., just like they did in the
good old days. Unfortunately, if it comes to that in these
cases, our Clients usually lose whatever hopes they might
otherwise have had to collect.
most cases, our Client’s best option is to negotiate
a settlement, whereby they agree to terminate our investigations,
take the money and go. That generally cannot happen unless
the target is certain that the Client’s attorney can
negotiate in good faith. In the event that a settlement is
reached, we absolutely must
honor the nondisclosure agreements in good faith.
fourth point is inextricably intertwined with point three
- good faith cuts both ways. In
the event that the swindler remains intractable to the very
end, you and the Client’s attorney must follow thru
and “pull the trigger." It
is much easier to persuade the captain to permit your Client
to board the ship if he knows for certain that you are going
to sink it if he doesn't. Personally, I will not accept a
case unless the Client is committed to shut the scams down,
wind their operations up, and expose the swindler to the full
gamut of regulatory, law enforcement, and IRS scrutiny.
That brings me to point five. In many cases, at the end of
the day, your Investigative Report will make or break your
Client's ultimate claim to the relief outlined in the Internal
Revenue Code, §165(c). In an recently published article
on this subject, Bart H. Siegel, a prominent CPA, CFP, CFE
. . ., aptly characterized IRC §165 as one of the "best
kept IRC secrets."
will explain this in greater detail in a subsequent section,
but for the moment, suffice it to say that IRC
§165, as codified in Title 26 USC §165, is a door
through which those who have suffered certain uncompensated
casualty losses may recover as much as 35% of their losses,
and you, as that person's investigator are the key to the
door. Even assuming that the Client has
a competent attorney and a knowledgeable CPA, they are highly
unlikely to get through that door without you.
I want to address the significance of the “Client’s
attorney” to whom I have repeatedly referred. Unless
your Client has a sharp and aggressive attorney, your ability
to assist them will be limited. This is not the river to ride
with the vast majority of attorneys that are out there. I
have seen many cases where the attorney meant well, but their
efforts ultimately amounted to nothing more than a legitimized
if your Client suffered a loss that could properly be tax
deductible pursuant to the provisions of IRC §165, he
is going to need to consult with a competent and aggressive
attorney and/or CPA familiar with Title 26 USC §165(c)(2).
You simply will not believe the resistance your Client will
encounter when dealing with CPA's accustomed to treating investment
losses as "Capital Losses" under the provisions
of IRC §1211.
a potential Client does not have, or will not retain, competent
counsel, and obtain professional tax assistance from an expert,
your involvement in the case may be a miserable exercise in
frustration all the way around.
Articles: (I will add to this list as time permits)
I welcome your comments,
questions and suggestions.